Entries in fine
(1)

The U.S. Commodity Futures Trading Commission announced it had obtained an order requiring a Wisconsin man to pay restitution and a fine exceeding $5 million for operating a Ponzi scheme that counted his own family among the victims. Eric N. Schmickle, 37, was ordered to pay the penalties as part of a CFTC enforcement action that accused Schmickle of operating a commodity-based Ponzi scheme that raised more than $5 million from investors. Schmickle was also criminally charged in connection with the scheme, and was sentenced to a three-year term last month.

According to authorities, Schmickle promised to trade commodity futures contracts through his companies, Q Wealth Management and Aquinas. Friends and family members, including Schmickle's father and brother, gave him $300,000 to start in 2009, with the understanding that Schmickle would be entitled to 25% of any investment profits. Schmickle promised investors he would achieve substantial gains, which attracted additional investors that subsequently contributed over $4 million. However, these promises of lucrative gains were untrue, and Schmickle was far from the successful trader he claimed to be. In fact, rather than 25% gains, Schmickle instead racked up trading losses that exceeded $3 million. Schmickle also misappropriated investor funds for his own personal expenses, and only several thousand dollars remained when the scheme was uncovered.

Schmickle plead guilty to a single count of wire fraud in July 2012, and his plea agreement called for him to pay approximately $3 million in restitution to victims. While federal sentencing guidelines called for a sentence ranging from 57 to 71 months, the federal judge tasked with sentencing Schmickle chose to make a downward departure from the recommendation.